Why Should You Buy Home Insurance

India has witnessed many natural calamities in the past. The country is vulnerable to cyclones, earthquakes, landslides, floods, etc which have caused huge loss of life and damage to property. Tremors have been felt in many parts of India including Delhi NCR, Gujarat, Assam, Himachal Pradesh, Jammu and Kashmir, Mizoram, Haryana, Maharashtra, and Odisha. Delhi NCR witnessed an earthquake today, as well as 16 earthquakes during April-August last year.

According to National Disaster Management Authority, more than 58.6% of India’s landmass is vulnerable to moderate to very high-intensity earthquakes. Over 40 million hectares (12%) of its land is prone to floods and river erosion. Out of the 7,516 km long India’s coastline, 5,700 km is prone to cyclones and Tsunamis. 68% of its cultivable area is vulnerable to droughts, and its hilly areas are at risk from landslides and avalanches.

According to a 2019 report by AON plc, a British global professional services firm that sells a range of financial risk-mitigation products, five of the top ten costliest disasters of 2019 were flood-related. Seasonal monsoon floods in India was one of those which caused 1,750 deaths, an economic loss of USD 10 billion, and an insured loss of USD 150 million.

Destructive tropical cyclones in the Indian Ocean Basin- Cyclones Fani, Idai and Bulbul (Matmo), collectively contributed to the global economic toll by more than $14 billion. Cyclone Fani’s May landfall in India caused an estimated USD 8.1 billion in damage. Despite our country being vulnerable to a lot of natural disasters, home insurance is still not a priority for a majority of people.

It takes someone’s blood, sweat, and tears to buy a house and get it built. Your house is your prized possession which should be safeguarded against any mishaps like natural disasters or thefts, riot, etc. Else, it can take a huge financial toll on you.

What is Home Insurance?
Home insurance means insurance for your home, its contents, and your possessions. In the event of a man-made (theft, burglary, strike, riot, terrorism, etc.) and natural calamities (flood, landslide, storm, etc.), you have a financial backup for the restoration and renovation of your house.

Home insurance primarily covers two major parts. You can buy both covers or either one:

Features of home insurance
A comprehensive home insurance plan has many features to safeguard your house against unforeseen circumstances:

Tenure of home insurance
Home insurance policies are available for long-term as well as short-term tenure. Building structure only policies have a tenure of 1-30 years. One should opt for a longer tenure in building structure covers as 10-15% discounts are offered.
Home contents only policies have a tenure of 1-5 years while both building structure and home content policies have a tenure of 1-5 years.

Variants of home insurance coverage
A basic home insurance policy covers the cost of the structure of the house. The cover is provided in three ways:

Reinstatement value insurance: This is when the policyholder is given a value that equals the construction cost of the house where the value of the land on which the house is based is excluded.

Agreed value: This includes the land value and the cost of the construction of the house.

Indemnity Value: This is the market value of the house and it covers the construction cost and the depreciated value as per the age of the building.

For those owning bungalows, opting for the reinstatement variant is better as it covers the construction cost and the policyholder can rebuild the house after damages. Whereas, for people living in flats, an agreed value variant will suit them better.

“In reinstatement variant, until and unless the entire building is rebuilt, the policyholder won’t get the claim. Therefore, an agreed value option for a flat owner will be better. In such a case, if there is a mishap, the insurance company pays the sum insured agreed at the time of taking the insurance policy as soon as the admissibility of the claim is confirmed and the customer can purchase a new flat immediately,” says Sanjay Singh Chauhan, Business Head, SME, and Home Insurance, Policybazaar.

Cost-efficient
Unlike life or health insurance, the premiums for home insurance are significantly low. For example, the annual premium of HDFC Ergo Home Shield plan which covers the content worth Rs 20 lacs, and the structure of the house worth Rs 1 crore would be Rs 4,314. The annual premium of Digit Insurance plan covering a house worth Rs 1 crore and it’s content worth Rs 20 lacs would be Rs 3,742.

Applying for a home insurance policy online
Policybazaar offers a host of options for buying home insurance. Following are the steps to buying home insurance from Policybazaar:

1. Go to Policybazaar’s home page and click on the ‘Other insurance’ tab.
2. Click on ‘Home insurance’ from the sub-menu.
3. A new webpage will open. You need to choose the type of your property whether it’s rented or owned by you. Then, type the value of your property and home content, the policy term on the top of the page.
4. Enter your name, mobile, number, e-mail id, and location and click on ‘Proceed.’
5. Choose among the various options of insurance policies. The Premium amount will be shown on the screen. Read the terms and conditions of the policies carefully. Then, click on Proceed.
6. You will be required to fill in your personal details like Name, Address, Mobile Number, PAN number, Aadhar Number, Occupation, annual income, marital status, date of birth. After filling in all these details, click on Proceed and you will be directed to the payment gateway.
7. The payment can be made online using a credit/ debit card or net banking.
8. Keep and save the fine print of the policy schedule.